Branding & Rebranding Utility 2.0

The Times They Are A-Changin’

“Branding demands commitment; commitment to continual re-invention; striking chords with people to stir their emotions; and commitment to imagination. It is easy to be cynical about such things, much harder to be successful.” — Sir Richard Branson

What truly excites me about innovative organizations, it is their uncanny ability to succinctly articulate BRAND VALUE. We all know that the most powerful brands around can be described in only 2 to 3 words. For example: McDonald’s — is all about Fast Food; Walmart — is all about Low Prices.

So what happens to utilities’ brand when electric grid is facing the largest energy sector transformation in 100 years? IMHO, Internet of Energy, is a good example of difficulties associated with Disruptive Innovation. Such complex undertaking can only be achieved by building an integrated platform which balances technology, data, policy, regulations, best practices, relationships and capital. And it is not an easy task.

Utilities could become the biggest change agents of energy sector. Yet, in addition to transforming electric grids and tackling the impact of Distributed Generation (DG) — they also must address the issue of REBRANDING.

Utilities’ disappearing revenues and the risk of dealing with over $2 trillion of stranded assets is real. According to many reports, global financial exposure starts with US at $412 billion of unneeded fossil fuel projects by 2025, followed by Canada ($220bln), China ($179bln), Russia ($147bln) and Australia ($103bln) — and more.

Utilities 2.0 don’t need to become cynical and chose between the Pessimists and the Optimists around us. Economically sound and environmentally progressive SOLUTIONS — need not replace central generation, but rather complement it in a most efficient and innovative manner.

I listed below what is fundamentally missing in utilities’ approach to DG — through renewable energy financing over the last decade:

· Rooftop solar PV installations enjoyed an unprecedented growth — all around the world

· A multitude of tariff incentives, rebates, Investment Tax Credits and even already existing high retail costs of electricity in some geographies — made DG a viable economic investment to many end users

· Global solar demand was up 4.9% year-on-year in 2018, to 103 GW

· It may grow by as much as 7.7% in 2019 — to 111.3 GW

Problem

  1. To avoid the “death spiral” — most of the utilities are lobbying state regulators and Public Utilities Commissions for higher DG taxes, levies, rate increases, lower net metering rates, etc.
  2. At the most basic level, the rise of DG has pushed down demand for electricity and cut into utilities’ profits across the world
  3. The significant losses experienced by German energy giants such as RWE AG, E.ON and EnBW — have seen their market cap dwindle between 50% to 90% percent over the last 10 years
  4. North American utilities in California, NY, Arizona and other states are envisioning similar losses attributed to lower revenues and write-downs on coal and gas plant legacy assets

Solution

An irresistible value proposition that leads to:

  1. Avoiding losing $Billions in market cap value
  2. Avoiding losing unpopular and doomed-to-failure PR battle
  3. Avoiding huge lobbying costs
  4. Eliminating mounting political and climate change pressures
  5. Eliminating DG customer attrition and grid defection
  6. Presenting an inspiring leadership by addressing both: the LOGICAL and the EMOTIONAL aspects of crisis management
  7. Staying in control and shifting the balance of power

The rebranding of Utility 2.0 must stem from a business model that goes beyond offering new FEATURES. Although it can be portrayed as an improved CUSTOMER VALUE, its END VALUE can be easily replicated by competitors.

Since the highest benefits attributed to any brand can be realized at the END VALUE — focusing on escaping the competition offers the highest payback.

What I have learned over the years, is that without addressing the fundamental risk aversion issues, no matter how good the story is — it will still face much stronger head-winds than it deserves. After all, this is what Prospect Theory teaches us: we are all twice as sensitive to loses than we are gratified with our wins. Logic is huge, but it is always trumpeted by emotions.

The Bottom Line: Re-branding Utility 2.0 is not going to be easy. My advice: STAY POSITIVE. Daniel Kahneman, the winner of the Nobel Prize in Economics and the author of a fabulous book: “Thinking Fast & Slow” said it the best about being optimistic:

“Optimism is normal, but some fortunate people are more optimistic than the rest of us. If you are genetically endowed with an optimistic bias, you hardly need to be told that you are a lucky person — you already feel fortunate.

An optimistic attitude is largely inherited, and it is part of a general disposition for well-being, which may also include a preference for seeing the bright side of everything. If you were allowed one wish for your child, seriously consider wishing him or her optimism.

Optimists are normally cheerful and happy, and therefore popular; they are resilient in adapting to failures and hardships, their chances of clinical depression are reduced, their immune system is stronger, they take better care of their health, they feel healthier than others and are in fact likely to live longer.

Optimistic individuals play a disproportionate role in shaping our lives. Their decisions make a difference; they are the inventors, the entrepreneurs, the political and military leaders — not average people. They got to where they are by seeking challenges and taking risks. Their confidence in their future success sustains a positive mood that helps them obtain resources from others, raise the morale of their employees, and enhance their prospects of prevailing. When action is needed, optimism, even of the mildly delusional variety, may be a good thing.”

Oleg Feldgajer is President & CEO of Canada Green ESCO Inc. Oleg is positioning the company to become a leader in financing AI enhanced green energy projects and ventures. CGE’s mission is to guide DISRUPTIVE businesses in ENERGY & TRANSPORTATION toward profitable business models. Oleg is passionate about such mission, and firmly believes that without AI based innovation, we will all prematurely choke on polluted air and dirty water. CGE delivers 100% financing (levered and unlevered) to its clients — and utilizes large equity pools, and non-recourse debt. Oleg offers creative, fresh ideas to open-minded businesses — that embrace both: logic AND opportunistic intuition. CGE stands against mediocrity & its modus operandi is quite simple: If CGE is not invited to join your BOD, or Advisory Board — we failed!

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